Facebook shares fell more than 8 percent, to $199.95, in after-hours trading.
The company said it had 1.47 billion daily users in June, compared with the 1.48 billion average of analysts' estimates compiled by Bloomberg. His fortune tumbled in late trading Wednesday, as shares of the social media giant slid 20% in post-market trading in NY on disappointing results.
Ad sales in the second quarter rose 42 per cent to US$13.04 billion but costs, bolstered by moves to improve content and security after the data scandal, rose 50 percent from a year earlier to US$7.37 billion.
Although Facebook's Q2 earnings report showed that it missed earnings and user growth expectations by only slim margins, investors may have been looking for a reason to run.
"Our total revenue growth rates will continue to decelerate in the second half of 2018, and we expect our revenue growth rates to decline by high single-digit percentages from prior quarters sequentially in both Q3 and Q4".
"This [Instagram] has been a story of great innovation and product execution", praised Zuckerberg, who added that Facebook's sprawling infrastructure enabled Instagram to scale twice as fast to where it is now with 1 billion monthly active users.
Facebook growth was already slowing in Europe, and the new regulations may have added to that, said analyst Daniel Ives of GBH Tech Research.
Facebook Chief Financial Officer David Wehner told investment analysts on a conference call that the company's operating margin, a key measure of profit, would trend toward the "mid-30s" over the next several years, down from 44 percent in the quarter that ended June 30.
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Facebook also reported that its user base in Europe had shrunk because of a new privacy law there, marking one of the few times in the social network's history that it has reported a user decline in any region. Facebook's stock continued to nosedive during the call with investors, who pressed the company on its slowing growth and future ad revenue.
In the same quarter a year ago, Facebook rang up $1.32 in EPS on revenue of $9.32 billion.
For advertisers, though, Facebook and Instagram are performing as well as ever.
Facebook's daily- and monthly- active user figures were all below analysts' predictions. It owns three other properties with more than 1 billion users: WhatsApp, Messenger and Instagram. "We think that's the right thing to do for the business", he said. The company is also rapidly expanding its real estate around the world to accommodate a hiring spree, which includes thousands of new workers to help combat foreign election manipulation on the site.
Shares tumbled 20 percent subsequent to the company reporting its second-quarter earnings - after the market closed.
Gene Munster, a venture capitalist at Loup Ventures, said in an email that Facebook is "entering a new period" where declining user growth will translate to slower revenue growth.
Analyst Ross Sandler with Barclays asked if revenue growth was set to drop to "around 20% by the fourth quarter of this year".